Capital Power Corporation · TSX:CPX
Capital Power — Non-Deal Roadshow (November 2011)
33 slides from Capital Power's roadshow presentation, November 2011
Slide 1: Investor Meetings
Investor Meetings Stuart Lee, SVP Finance & CFO Bryan DeNeve, SVP, Commercial Services November, 2011
Slide 2: Capital Power overview
Capital Power overview Canadian-based, growth-oriented independent power producer (IPP) operating in North America Spin-off of power generation assets from EPCOR / IPO in July 2009 CPX listed on Toronto stock exchange • Added to S&P/TSX Composite Index in June 2011 • Market cap of ~$2.5B (full
Slide 3: Corporate strengths
Corporate strengths Solid platform for sustainable growth Financial strength with access to capital Proven operating and construction history Young and modern fleet Large, high quality generation portfolio 3
Slide 4: Large, high quality generation portfolio
Large, high quality generation portfolio Interests in 15 facilities, more than 3,300 MW(1) Segmented owned capacity by MW(1) Additional facilities to come on line 4% • 3 wind projects (397 MW) 11% located in BC, AB, and ON with 28% expected CODs in 2012 & 2013 • 1 wind project (90 MW net) in 25% O
Slide 5: Expected segmented owned capacity
Expected segmented owned capacity Current: By 2014 year-end: 15 facilities (3,308 MW(1)) 17 facilities (3,755 MW(2)) • 40% contracted • 45% contracted 4% 4% 11% 17% 28% 27% 25% 24% 32% 28% AB commercial ON / BC contracted US Northeast commercial North Carolina contracted AB contracted Contracted por
Slide 6: Technology focus (2014)
Technology focus (2014) 17 facilities (3,755 MW(1)) Segmented by owned capacity(1) Expect to divest 3 small hydro plants (53 MW total) in the near term; 1 of Other the hydro plants already divested in 1% Nov/11 Wind 14% Expected future growth from natural gas facilities (contracted & merchant) G
Slide 7: Modern fleet
Modern fleet Current fleet with average facility age of ~12 years will become younger after 4 new projects (487 MW) begin commercial operations in 2012 - 2014 Coal-fired generating facilities, which have historically represented the majority of the portfolio, have useful lives of up to 45 years
Slide 8: Proven operating history
Proven operating history Historical operating performance 92% 96% 90% 94% 10,000 9,000 Generation (GWh) 8,000 Generation Average plant 7,000 availability 2008 2009 2010 2011E 3-year average plant availability of 93% 8
Slide 9: Proven construction capability
Proven construction capability Foundation of proven capability and processes in construction Significant experience in the construction and operation of both thermal (coal, natural gas) and renewable (wind, biomass, small hydro) facilities Capital Power (predecessor EPCOR Utilities Inc.) led c
Slide 10: Strong cash flow generation
Strong cash flow generation Generating significant discretionary cash flow net of dividends and maintenance capex • Discretionary cash flow represents 47% of Funds from operations • Substantial future cash flows from new Keephills 3 that began COD in Sep/11 and from four wind projects online in 20
Slide 11: Financial strength and access to capital
Financial strength and access to capital Investment grade minimum BBB credit rating to access debt markets • Current BBB credit rating from S&P and DBRS • Access to competitive cost of capital to fund growth • Significant differentiator from many U.S. IPPs Strong balance sheet • Debt-to-capitali
Slide 12: Successful capital markets financings
Successful capital markets financings For 2011 YTD, raised ~$1.1B in gross proceeds (44% equity / 56% debt) to fund growth Well spread-out debt maturities are supported by long asset lives Debt maturity schedule(1) $400 $386 $350 $305 $300 $250 US $230 ($M) $200 $200 $179 $145 $150 $100 US $65 $
Slide 13: Growth from Alberta power market
Growth from Alberta power market Alberta (AB) has a competitive wholesale energy and ancillary services market operated by the Alberta Electric System Operator (AESO); market has an installed generation capacity of ~13,000 MW No capacity market – power generators must recover all costs through r
Slide 14: Capturing upside from AB power prices
Capturing upside from AB power prices Hedging positions based primarily on generation from Genesee 3 baseload coal plant, output from the Sundance PPA and includes Keephills 3 (COD Sep 1/11) Actively trading (portfolio optimization) throughout various time periods to create incremental value to
Slide 15: Alberta portfolio hedged position
Alberta portfolio hedged position Hedged positions as of Sep 30/11 Oct - Dec 2011 2012 2013 Hedged positions (% hedged) ~70% ~43% ~16% Average hedged prices Mid-$60/MWh Mid-$60/MWh Mid-$60/MWh Large unhedged positions in 2012-13 to capture upside from rising power prices 15
Slide 16: Investment strategy for growth
Investment strategy for growth Merchant Geography Technology Financial Flexibility Develop within Target Acquire Zone Contracted 16
Slide 17: North American footprint & growth strategy
North American footprint & growth strategy Significant growth through acquisitions and development Western Canada Maintain discipline on: Ontario • geography • size Pacific • fuel type US Northeast Northwest • economics Mid-Atlantic US US Southwest Plants in operation Plants under construction o
Slide 18: 2011 Growth announcements
2011 Growth announcements Launched presence in US Northeast market with the acquisition of 3 natural gas plants (1,069 MW total) in New England Rumford Tiverton Bridgeport Location Rumford, Maine Tiverton, Rhode Island Bridgeport, Connecticut Fuel Type Natural Gas Natural Gas Natural Gas Size 270
Slide 19: Acquisition of Halkirk Wind
Acquisition of Halkirk Wind Announced 100% acquisition of the Halkirk Wind LP from Greengate Power Corporation in Jun/11 150 MW wind development project located east of Red Deer, AB 20-year fixed-price agreement with Pacific Gas & Electric Company for the purchase of Renewable Energy Certifica
Slide 20: Development of K2 Wind Ontario
Development of K2 Wind Ontario Capital Power, Samsung Renewable Energy Inc., and Pattern Renewable Holdings Canada announced a limited partnership agreement on Aug 3/11 for the development, construction and operation of K2 Wind Ontario • Equal economic interest in the project by three partners 2
Slide 21: Capital Power's growth
Capital Power’s growth(1) Since 2009 IPO, ~2,400 MW (173% increase) have been added or currently being developed 4,000 K2 Wind Ontario 3,500 Port Dover & Nanticoke 3,000 Quality Wind, Halkirk Wind 2,500 Roxboro & Southport MW 2,000 Keephills 3 1,500 New England 1,000 Island Generation 500 CBEC 2 & 3
Slide 22: Investment highlights summary
Investment highlights summary Large, high quality generation portfolio Young and Solid modern fleet platform with proven for operating growth history Diversified Financial portfolio in strength with attractive North access to American capital Long-term markets contracts & merchant position provides
Slide 23: AB reserve margin forecast
Appendix AB reserve margin forecast Supply-demand balance (reserve margin) expected to be tight until Shepard (800 MW) COD in 2015, and then gradually tighten through the early 2020s • Bringing significant upside to power prices in AB market When AB net reserve margin falls below 10%, new genera
Slide 24: AB cost of generation (COG)
Appendix AB cost of generation (COG) Sustained higher $160 power prices are $140 required to incent new builds $120 ($ /M W h ) Current market fairly $100 well-supplied, $80 significantly tighter $60 now due to $40 shutdown of 2015 2016 2017 2018 2019 2020 2021 2022 2023 Sundance 1 & 2 & AB Powe
Slide 25: AB power market (new builds/retirements)
Appendix AB power market (new builds/retirements)(1) New builds/retirements (major projects of 100+ MW) over the next 5 years based on internal assumptions Project Capacity Developer Type COD year (MW) Halkirk 150 Capital Power Wind 2012 Blackspring Ridge 300 Greengate Wind 2013 I Wind Power Corp
Slide 26: Summary of assets
Appendix Summary of assets Clover Bar Energy Clover Bar Genesee 1 Genesee 2 Genesee 3 Keephills 3 Joffre Centre Landfill Alberta Contracted Alberta Commercial Electric 410 MW 410 MW 495 MW 495 MW 480 MW 243 MW 4.8 MW Capacity % owned / 100 / 100 100 / 100 50 / 100 50 / 0 40 / 0 100 / 100 100 / 100 o
Slide 27: Summary of assets (cont'd)
Appendix Summary of assets (cont’d) Island Kingsbridge 1 Miller Creek Brown Lake Generation Tiverton Rumford Bridgeport Ontario & British Columbia Contracted US Northeast Commercial Electric 40 MW 33 MW 7 MW 275 MW 279 MW 270 MW 520 MW Capacity % owned / 100 / 100 100 / 100 100 / 100 100 / 100 100 /
Slide 28: Summary of assets (cont'd)
Appendix Summary of assets (cont’d) Southport Roxboro North Carolina Contracted Electric 88 MW 46 MW Capacity % owned / 100 / 100 100 / 100 operated Location Southport, North Roxboro, North Carolina Carolina Fuel Coal, tire-derived + Coal, tire-derived + wood waste CHP wood waste CHP Commercial 1987
Slide 29: Summary of projects under development
Appendix Summary of projects under development Port Dover & Halkirk K2 Wind Ontario Quality Wind Nanticoke Alberta Commercial & Ontario & British Columbia Contracted Contracted Electric 150 MW 270 MW 142 MW 105 MW Capacity % owned / 100 / 100 33.3% owned 100 / 100 100 / 100 operated Location Halkirk
Slide 30: Forward-looking information
Forward-looking information Certain information in this presentation is forward-looking within the meaning of Canadian securities laws as it relates to anticipated financial performance, events or strategies. When used in this context, words such as will, anticipate, believe, plan, intend, target, a
Slide 31: Forward-looking information (cont'd)
Forward-looking information (cont’d) sources of funding; (iv) the Company’s assessment of commodity and power markets, including power prices and forward power prices for 2011; (v) the Company’s assessment of the markets and regulatory environments in which it operates; (vi) weather; (vii) availabil
Slide 32: Forward-looking information (cont'd)
Forward-looking information (cont’d) the New England market, expectation of additional unrealized gains to be recognized upon settlement of the remaining heat rate options, and also to include an additional $3 million for a Connecticut energy tax which was introduced in June 2011; (v) expectations r
Slide 33: Investor Relations contacts
Investor Relations contacts Randy Mah Senior Manager (780) 392-5305 rmah@capitalpower.com www.capitalpower.com Chris Williams Senior Analyst (780) 392-5105 cwilliams@capitalpower.com www.capitalpower.com 33